Morning Commentary: Secondary trading light; health care sector boosted by Array buyout

By Abigail W. Adams

Portland, Me., June 17 – The convertibles secondary space was quiet at the launch of the week with not much activity on the tape.

There was about $45 million in reported volume one hour into Monday’s session with few names seeing concentrated trading activity.

The biopharmaceutical sector was soft last week with an absence of merger and acquisition activity in the space, a market source previously said.

However, that trend changed on Monday with Pfizer’s $10.64 billion buyout bid for Array Biopharma.

Array’s 2.625% convertible notes due 2024 were among the most actively traded names in the secondary space on Monday.

The notes jumped above triple par as stock skyrocketed on the news. The notes were changing hands around 306.5, according to a market source.

Array stock was changing hands at $46.30, an increase of 56.45%, shortly before 11 a.m. ET.

In an effort to build up its line of cancer drugs, Pfizer intends to purchase Array for $48.00 per share, which is a 62% premium over Friday’s closing price, according to Bloomberg.

Pfizer intends to fund the deal with debt and cash on hand. It is expected to close in the second half of the year.

While their convertible bonds were slow to trade, the news boosted the equity of several convertible issuers in the sector.

Clovis Oncology Inc.’s stock was up more than 8% on the news. Intercept Pharmaceuticals, Inc.’s stock was up more than 3%. Insmed Inc.’s stock was up more than 4%.

Array’s buyout news was “levitating part of the universe,” a market source said.

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